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| Dividend Tips |
Transactions costs compound over time -- in a negative
way. Every time I buy or sell a stock a
small portion of that transaction is quietly siphoned from my portfolio. The more transactions there are, the harder my
investments have to work (the more compounding they need to deliver) to overcome
the transaction loss. This reduces the
likelihood of success.
Buying good dividend paying stocks and holding them long-term means enjoying the positive compounding of dividends without the
negative compounding effect of the transactions costs. Losing even 1% in unnecessary transactions
means extra years to reach my goal or worse, falling short altogether.
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